Dr. Reddy's, Future Retail among buy ideas which could give 9-18% return

Ashish Chaturmohta

Better-than-expected GDP number for June quarter saw the markets opening the week higher, but negative global cues and currency woes meant selling pressure emerged later in the session.

The Nifty50 closed near the lows at 11,582-levels down by 0.84 percent on Monday. Broader indices did better than benchmark with BSE Mid-cap and Small-cap losing 0.45 percent and 0.17 percent, respectively, for the day.

The market breadth on the BSE was slightly in favour of declines on Monday. For the day, Nifty formed a Bearish Belt Hold line i.e. opening and high price are the same.

It broke and closed below the rising support trendline connecting lows of 10,558, 10,946 and 11,340 level.

Trading below Monday’s low i.e. 11,567, we expect correction towards 11,495-11,485 levels where supports are placed. The next support is seen at 11,340 levels.

On the upside, the index needs to clear 11,760 levels for the uptrend to continue towards 11,845-11,925 levels. In Nifty options, maximum open interest for Puts is at 11600 followed by 11500, while for Calls it is at 11800.

Good amount of Call writing was seen in 11,800 indicating it will act as overhead resistance for the market in the near term. India VIX measure of volatility has jumped to 13.39 levels after seeing a reversal from the support level of 12.

Further rise from current levels will add pressure on the market.

Here is a list of top 5 stocks which could give 9-18% return in 1 month:

Dr. Reddy's Laboratories: Buy| CMP: Rs 2593| Stop Loss: Rs 2490| Target 2800-2850| Return 10%

The stock touched an all-time high of 4387 levels in November 2015 and since then it had been in a decline mode to hit a low of Rs 1901 in August last year.

Over the past one year, the stock has been trading in a range of 1900-2600 levels and formed a double bottom pattern on the weekly charts.

Volumes have been good which indicates value buying at lower levels in the stock. The recent rally has brought the stock to neckline i.e. breakout level.

The price has given a breakout from Bollinger band with the expansion of band and closed above upper band suggesting a continuation of the trend in the direction of the breakout.

MACD line on weekly charts has turned up from equilibrium level of zero. Thus, the stock can be bought at current levels and on dips towards Rs 2,550 with a stop loss below Rs 2490 for a target of Rs 2800-2850 levels.

Mahindra CIE Automotive: Buy| CMP: Rs 287| Stop Loss: Rs 270| Target: Rs 340| Return 18%

The stock has been trading between 265 and 205 odd levels for more than one year. In Monday’s session, the stock witnessed a strong price momentum along with high volumes which helped the stock to cross the resistance zone of 275-280 and close at three years high.

Overall, looking at the weekly chart, the stock is witnessing a major base formation between 310 and 160 odd levels. The price has given a breakout from Bollinger band with the expansion of band and closed above the upper band suggesting the start of a fresh uptrend in the direction of the breakout.

The momentum indicators are in a bullish mode on the daily chart. Thus, the stock can be bought at current levels and on dips towards Rs 280 with a stop loss below Rs 270 and a target of Rs 340 levels.

Future Retail: Buy| LTP: Rs 574.40| Stop Loss: Rs 550| Target: Rs 650| Return 13%

The stock has been in a decline mode after hitting high of Rs 638 in the month of April this year. It hit a low of 452 which is a strong support zone for the stock and seen smart recovery from the lows.

Last week, the stock had crossed falling resistance trend line and after consolidating above it. The price has seen a follow-through action in Monday’s session.

The price has given a breakout from Bollinger band with the expansion of band indicating continuation of the trend.

The relative strength index (RSI) on the weekly chart has given a positive crossover with its average for the first time. Thus, the stock can be bought at current levels and on dips towards Rs 565 with a stop loss below Rs 550 and a target of Rs 650 levels.

Tata Elxsi: LTP: Rs 1446| Stop Loss: Rs 1385| Target: Rs 1650| Return 14%

The stock is in a long-term uptrend as it has been forming higher tops higher bottoms on its weekly chart. The stock touched a high of 1491 in the month of July this year and since then it has gone into a consolidation mode.

The stock has been trading between 1491 and 1360 odd levels for the last eight weeks. The price has taken a support at its 50-days moving average which has acted as a support in the past.

The Relative strength index and Stochastic have given a positive crossover with their respective averages on the daily chart. Thus, the stock can be bought at current levels and on dips towards Rs 1425 with a stop loss below 1385 and a target of 1650 levels.

United Spirits: Sell| LTP Fut: 614| Stop Loss: Rs 640| Target: Rs 560| Return 9%

The stock has been in a downtrend since it hit a high of 802 in the month of January this year. The stock was not able to cross its falling resistance connecting highs of 802 and 736.

However, last week, it touched a high of 662 but then saw a reversal from its 200-day moving average and the falling resistance trend line.

The Relative strength index and MACD line have given negative crossover with their respective averages on daily chart indicating resumption of the downtrend.

Thus, the stock can be sold at current levels and on the rise towards Rs 620 with a stop loss above Rs 640 and a target of Rs 560 levels.